Rajasthan, India's popular tourist state, is famous for its sprawling palaces, historic forts, vast tracts of desert and celebrity weddings. Olives may be added to the list. The state is trying to grow the fruit on a large scale in India for the first time, in its deserts and semi-arid areas, and there are signs of success.

Not only would olive cultivation introduce struggling farmers in the state's ailing and neglected agricultural sector to a lucrative cash crop and boost the local economy. It would also satisfy the growing domestic demand for healthy olive oil in the country, which has one of the highest rates of heart disease in the world.

The $3m pilot project, testing olive cultivation across seven agro-climatic regions, is in its third year and on track to deliver olives this year and next. About 112,000, saplings were brought from Israel three years ago and planted across 182 hectares. "Four farms in the north of the state, in the desert areas, have shown positive signs of flowering and olives will follow shortly. A semi-commercial yield is expected this year. We are certain it will be a success," says Surinder Singh Shekhawat, head of the project under Rajasthan Olive Cultivation Ltd, a three-way collaboration between the state government, an Israeli firm and an Indian firm.

It may come as a surprise that olives are being grown in the harsh climatic conditions of the state where temperatures swing from extreme highs to lows, especially when the olive's native home is the mild Mediterranean. But Rajasthan's cold spells are key to cultivation. "The olive requires a certain chilling temperature, which we have in the state. Everything else can be managed with technology," says Shekhawat. In addition, the olive is able to withstand scorching temperatures and has a low water requirement, which is crucial in this water-scarce state.

The state has taken its cue from Israel, which experiences a similar climate to Rajasthan and has been successful in producing olives in desert areas with the help of technology. As part of the joint venture, the Israeli firm Indolive Ltd is providing Rajasthan with the latest sensor and drip irrigation technology, which measures exactly how much water, nutrients and fertilisers the plants need for a healthy, high yield, avoiding water wastage.

Once the pilot is a success, cultivation will be taken to hundreds of farmers in the initial stage. The technology would be replicated locally and handed to the farmer at a subsidised rate, along with training in crucial plant management.

The challenge will be how to modernise the traditional farming community and encourage small farmers to come together to farm and manage olives on larger, more efficient plots. Experts say Indian agriculture is in poor shape due to low standards and practices, and has suffered from cost-saving shortcuts. But olives need great care, so management – and the state's role – will have to be robust.

Exploring crop diversification and efficient, modern farming techniques are part of the state's plans to breathe life into the state's agriculture. The adverse climate conditions and water scarcity means very few commercial crops grow in the state, while common crops such as wheat, mustard and maize consume large amounts of water and don't bring big financial returns.

About 30km from the state capital, Jaipur, at Bassi, 40 hectares of wasteland has been cleared to grow peppers, strawberries, pomegranates, tomatoes and cucumbers under fasttrack modern farming techniques. A high technology centre with modern nurseries and cooling chambers is planned for the area.

With other northern states in India closely watching the pilot, Shekhawat believes they will quickly start replicating it once there's concrete success, which means India could compete with the Mediterranean in the future, producing olives at a lower cost. Olive picking and pruning is a labour-intensive task and India's labour costs are low. On top of that, the state has huge swaths of underutilised land, unlike European countries. He hopes to expand to 5,000 hectares in the next few years, with 2,500kg of oil being produced per hectare and 15 tonnes of fruits.

There is potential to export table olives and high-grade flavouring olive oil for which Indians have not yet developed a palate. But most olives could be channelled for domestic consumption. Lower-grade, pomace cooking oil is increasingly being used in the country's kitchens as heart-related diseases soar.

With two years of the project left, the focus will turn to overcoming the challenges of rolling out olive production on a mass scale. If this goes to plan, India could be the new home of the olive.